McDonald's Sustainable Supply Chain Management

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Transcript of McDonald's Sustainable Supply Chain Management

Supply Chain History Supplier Measurement Recommendations McDonald's Sustainable Supply Chain Management Purchasing Process buyerssupplierscommon systemshared information 1. History of SCM2. Supplier Measurement3. Connect Customers4. Challenges5. Recommendations McDonald’s addressed consumer demand in a variety of ways: providing healthy options and slowing down expansion to concentrate on qualityLong understood that linking demand and supply enables the constant reduction of waste while enabling the constant reduction of wasted opportunity Outsourcing "In business for yourself, but not by yourself.” -Ray Kroc- 100% Outsourced Supply Chain1990-Special teams arrived from the United States to India (effectiveness of logistics industry & the reliability of transport sector1996-Launched first outlets in India Multi-Layered Supply Chain Tier 1- Direct Suppliers - Process ingredients (e.g.potato products to French fries,and hash brownsTier 2- Growers and processors,poultry farms and companies that manufacture coating systems that coat the vegetable and chicken patties - Forward ingredients to the Tier-I Cold Chain Multi-temperature vehicles,carry all 3 temperature products (Frozen, Chilled & Dry) Truck containers were made with two side doors in addition to the rear door. The side doors are used to unload products without disturbing the products in the other temperature zones Pull Supply Chain Issues orders to the Distribution Center --> routes the order to the supplier --> supplier produce itThe supplier maintains barely any extra stocks Forecasting A three-day to one-week forecast to the DC -->The DC has a three-month rolling forecast with the suppliers Long-term Planning --> 31Q system --> 3 = 3 years McDonald's keep checking its plans --> 1 = the detailed forecast of the next year --> Q = the quarterly monitoring of these forecasts Lead Time Reduction Fixed locations of suppliers and restaurants and own fleet of dedicated trucks and cleanersMcDonalds’ truck = non-stop running of the fleetEnables the supply chain team to work backwards to ensure timely distributionLead times for trucks and deliveries is predictable --> Efficient inventory turn ratio EDI (Electronic Data Interchange)Identify and select the supplierCreate and approve the purchasing acquisitionsPlacing purchase ordersRequest product information and pricesBusiness communication I'm lovin' it! McDonalds V.P.needed “a healthy mechanism to ensure its vision of a fully sustainable global supply chain”3 questions proceeding with a new supplier framework Based on framework McDonalds decided the reviewing system focus on sustainability of the company’s top 5 sourced commodities1. Beef2. Pork3. Chicken4. Buns5. Potatoes The company will need to continuously put the processes together and be able to respond quickly and efficiently to opportunities arising from market or customer demands Piloted Test Scorecard content Scorecard showed that most suppliers reduced environmental impactMcDonalds sought to expand use of the audit system to all direct suppliers in its top markets Encouraging McDonalds to create its ownSQI (Supplier Quality Index)focus on social performance rather than environmental impact Distributor Quality Management ProcessMeasures responsiveness & efficiency of the distribution process Performs unannounced internal & third party audits for the distribution center Challenges McDonald's Potato Supplier, Frank Martinez: "Dream Come True" Green Highlights - LEED certified McDonald's restaurant in Chicago, IL. McDonald's Commercial- Healthy Meal With Mom Freshness and QualityHigher expectations from consumersQuality has an effect on sales and stock priceSupply ChainMost difficult areas to monitor80-90% of influence from a social responsibility standpointLeads to quality control issues Product InnovationMay need encouragement to its suppliersTrust and mutual respect with the suppliers during the business transactionLonger lead times on the production lineHigher costs to tailor the specific product Bull Whip EffectHigher costs and supply chain issuesFluctuations in demand at a client levelChain waits for orders to be madeBuild-to-Stock (BTS) De-Centralized StructureThree-legged stool concept: Company, Franchises, and SuppliersResponsiveness to issues vs. timeSolution: Divided organization into 5 additional regions, and is meant to help them react quicker to issues in a time-sensitive matter Connect Customers Nutrition: Recycling Program: Reduce waste and replace with reusable or recycled materials.Estimated 300 million lbs of packaging reduced.Estimated savings of 6 million per year Products & Connecting: Environmental Strategy Online nutrition information